The bench also held that:
The NCLAT held that, the applicant, the financial creditor, had bona fide, within the period of limitation, initiated proceedings against the Corporate Debtor under the SARFAESI Act, 2002 and was thus entitled to exclusion of time under Section 14(2) of the Limitation Act.The NCLAT, after exclusion of the period of about three years and six months till the date of the interim order of the High Court, during which the Financial Creditor had been proceeding under SARFAESI Act, 2002 found that the application of the Financial Creditor, under Section 7 of the IBC, was within limitation.
Issues considered by the Apex court:
- Whether delay beyond three years in filing an application under Section 7 of IBC can be condoned, in the absence of an application for condonation of delay made by the applicant under Section 5 of the Limitation Act, 1963?
- Whether Section 14 of the Limitation Act, 1963 applies to applications under Section 7 of the IBC? If so, is the exclusion of time under Section 14 is available, only after the proceedings before the wrong forum terminate?
“A plain reading of Section5 of the Limitation Act make sit amply clear that,it is not mandatory to file an application in writing before relief can be grant edunder the said section. Had such an application been mandatory,Section 5 of the Limitation Act would have expressly provided so. Section 5would then have read that the Court might condone delay beyond the time prescribed by limitation for filing an application or appeal,if on consideration of the application of the appellant or the applicant, as the case maybe, for condonation of delay, the Court is satisfied that the appellant/applicant had sufficient cause for not preferring the appeal or making the application within such period. Alternatively, aproviso or an Explanation would have been added to Section5, requiring the appellant or the applicant, asthe case maybe, to makean application for condonationof delay. However,the Court canalways insist that anapplication or an affidavit showing causefor the delay befiled. No applicantor appellant canclaim condonation ofdelay under Section 5of the LimitationAct as ofright, without makingan application.”The bench also noted that the IBC does not exclude the application of Section 6 or 14 or 18 or any other provision of the Limitation Act to proceeding under the IBC in the NCLT/NCLAT.
All the provisions of the Limitation Act are applicable to proceedings in the NCLT/NCLAT, to the extent feasible, it said.The bench further observed that substantive provisions of Sub-sections (1), (2) and (3) of Section 14 do not say that Section 14 can only be invoked on termination of the earlier proceedings, prosecuted in good faith.
Further, regarding the contention relying on NCLAT judgment in Ishrat Ali case, the bench observed that there is no rationale for the view that the proceedings initiated by a secured creditor against a borrower under the SARFAESI Act for taking possession of its secured assets, were intended to be excluded from the category of civil proceedings. While dismissing the appeal, the bench observed:
If, in the context of proceedings under Section 7or 9 of the IBC, Section 14were to be interpreted with rigidand pedantic adherence toits literal meaning,to hold thatonly civil proceedings in Court would enjoy exclusion, the result would be that an applicant would not even be entitledto exclusion ofthe period oftime spent in bonafide invoking anddiligently pursuing anearlier application under thesame provision ofIBC, for thesame relief, beforean Adjudicating Authority, lackingterritorial jurisdiction Thiscould not possibly have been thelegislative intent.In our considered opinion, the judgment of the NCLAT in the case of Ishrat Ali is unsustainable in law. The proceedings under the SARFAESI Act, 2002 are undoubtedly civil proceedings.
At the end, it was observed that the expression 'Court' in Section 14(2) would be deemed to be any forum for a civil proceeding including any Tribunal or any forum under the SARFAESI Act, 2002. The counsels in the case were Senior Advocate Siddhartha Dave and Advocate Sai Deepak. [READ JUDGMENT]